Wednesday, June 23, 2010

Medicare versus Medicaide

In the past week I've had three calls from friends about the difference between Medicare and Medicaide.  Basically, one is a federal insurance program for the elderly and the other is a state program that helps indigent  - or poor - residents.

Disclaimer before you read further:   This information is based on my experience and knowledge of Medicaide in two separate states.  Each state is different; to find out the specifics of your state, do your research.  I suggest that you search "(name of your state) AND  medicaide" or contact the your state agency for health and welfare.   The Area Agency on Aging within your local area is also a good resource to help you begin to understand Medicare and Mediciade in your state.

The basics:   Medicare and Medicaid are BOTH paid for by tax dollars - and you didn't think the USA has socialized medicine....
Medicare is government supported health insurance for the elderly, it DOES NOT PAY for nursing home or long term care.   Citizens 65 years and older pay premiums directly from their social security. You may select any doctor who accepts this as payment.
Medicaide is government paid nursing home (long term) care.  It may also help pay for Medicare premiums and for prescriptions.  Most of the funds for medicaid come from the federal government but the programs are administered by each state.   Each state still has to contribute something toward Medicaide.

Medicare is a federal insurance program available to US citizens over 65.   To pay for this plan, the federal government takes premiums directly from social security payments.   Most of us will be covered by Medicare at some point.   Even if you have health coverage as a retiree, those programs usually defer to Medicare once you turn 65 and you're likely to need more medical attention, prescriptions or procedures.   In some cases, the primary insurance you had through a pension plan or employer becomes your supplemental plan, meaning that it pays some of what Medicare does no. Medicare does NOT pay for long term care in assisted living or nursing homes.  They will not pay for on-going home health care or aides for elderly either.   They will pay for up to 120 days in a nursing home provided the patient shows improvement and any therapies administered help the patient improve to return home or return to assisted living.   As a citizen, you automatically qualify for Medicare and, near your 65th birthday,  you will receive a letter advising you of your status.   As of this writing, June 23, 2010, there are many doctors across the country who refuse to accept Medicare payments so use caution when selecting a doctor.

Medicaide is a state program (it may be called something else in your state) generally administered by the State Department of Health and Welfare.  Medicaide is not limited to the elderly and may also cover children of poor families, people with physical or mental disabilities or the most poor citizens.   It generally does not include dental or vision but in some states eye exams and dentures are covered one time during a set period, like onc every 5 years.  Medicaide DOES pay for long term care in assisted living or nursing homes and there are certain criteria to meet before an elderly person may receive Medicaide.    Generally these are:

  • Spend down to $2000 or $2500 in assets. This means that the elder MUST use all possible assets before they may receive medicaide.  They must consume all cash, CDs, stocks, bonds and savings. Note that if at anytime, an elders assets grow to MORE than $2000 or $2500, they may be disqualified from Medicaide until that money is spent.  If you know this will happen, you can plan for it and buy something that they need like depends, lap robes, eye glasses, dentures (medicaide will pay for eye glasses & dentures but only once every few years). Here's a link to an article about the Medicaide spend down on
  • Look back periods:  These can get you in to a lot of trouble.  Each state has a defined period where they look back at expenditures to determine whether someone qualifies.   This is to prevent transfer of ownership of valueables, gifting of cash, stocks, bonds, etc or deeding of any property before an application for assistance.    The object is to ensure that assets are used to provide for someone, that they consume their resources before receiving public resources for their support.   Some states have a look back period as long as 7 years!!  so be sure to thoroughly understand this before accepting anything from your elders.
  • Homes may be exempt: The elder may own a home and the state will not force the sale of it if a spouse, dependent child or other relative lives there.   The state may also permit the home to sit - without being sold - if the elder plans to return home.  
  •  Financial recovery:  most states seek some kind of financial recovery from an elders estate.  First they will put a lien on a home or proprety so that when the elder passes, the state will expect to recoup funds spent on care.  If the home/property is occupied by a surviving spouse the state may not use liens.   The state may also try to recover funds by forcing the sale of cars or other valuable possessions such as art or antiques.   
  • Pensions and social security must be spent toward care:  Any monthly income received by an elder must be spent on their care, this is often called a co-pay or care contribution.  In my mom's case, her social security and pension are deposited directly to her checking accounts and I write a check for her contribution each month.   The state pays the rest directly to the  nursing home,  I don't have anything to do with that.    
  • Monthly personal allowance:  Most states permit each elder to keep between $30-50 a month for their personal use.   This isn't a lot at all so I supplement when necessary.   I do not give the money directly to her but do pay for her hair cuts, permanents and regular hair appointments.   
Some other things to consider about Medicare and Medicaide: 
  • Medicare is your PRIMARY insurance after 65 but Medicaide helps: You'll still have to pay a monthly premium if you go on Medicaide but Medicaide will pay the premium for you.  So for doctor bills, procedures, tests, etc.   Medicare pays first, your supplemental plan (if you have one) pays second and Medicaide pays third.   Without a supplemental plan, Medicaide probably covers it all or the doctor may write off some of the charges.
  • Medicaide can start and stop payment so WATCH THEIR BANK ACCOUNTS!!:  If an elder is hospitalized, their care may be paid my Medicare for that period and for a time (sometimes as long as 120 days, 3 months)  AFTER they return to a nursing home.   BE CAREFUL and watch their funds during this period.  If their monthly income is NOT used for a nursing home while Medicare is paying, it can build up over the $2000 or $2500 in maximum assets.  This nearly happened to my Mom so I bought some personal items for her to ensure that she did not accumulate more than $2500.   I also started a burial fund - allowed by her states' Medicaide program) and plan to contribute to it if/when she begins to accumulate more than $2000.   On a personal note:  I don't feel like I'm ripping off the state or being dishonest in this case,  she would have been only $250-300 over the $2500 but that relatively small amount would cause all kinds of headaches and I'd have to redo her medicaide application all over.  
What's what is the difference between medicare and medicaid medicaide? what is the medicaide medicaid spend down spenddown? can mom dad give me money and still get medicaide medicaid?  Will medicare pay for nursing home.